Hanyang Securities: "Apple, awaited for three years, is coming to Fine M-Tec...a quantum leap in earnings"

[Financial News] Lee Jun-seok, a researcher at Hanyang Securities, forecast that Fine M-Tec’s earnings scale will change significantly in the second half as recovering Samsung Electronics foldable-device demand is joined by new demand from Apple. He also analyzed that once Apple-bound supplies gain momentum, seasonality—previously marked by significant earnings volatility around the launch of new foldable products—will ease. However, he did not provide an investment rating or a target price.
According to Hanyang Securities, Fine M-Tec’s consolidated revenue in the second quarter was 95.21 billion won, up 24.4% from a year earlier, while operating profit rose 38.6% to 7.33 billion won. Revenue from foldable backplates reached 73.2 billion won, driving the growth.
In particular, profitability improved even though second-quarter research and development (R&D) spending rose 65.1% from the average of the previous four quarters to 5.2 billion won. Despite making upfront investments in next-generation backplate processes and composite lamination technology, the growth rate of operating profit exceeded that of revenue. The company is considered to be making progress in stabilizing yields for its new processes.
The key factor in the second half is the contribution to earnings from Apple’s foldable device, which has remained a three-year expectation. Fine M-Tec has consistently been mentioned as an Apple foldable-related stock, but this had not translated into actual revenue. This year is expected to be the first in which expectations turn into figures as supplies of components for Apple gain momentum.
Lee said, "Fine M-Tec has supplied a cumulative 55 million sets since commercializing the world’s first foldable backplate," adding, "Assuming Apple’s initial foldable shipments reach 8 million units, the backplate market is estimated at approximately 290 billion won."
Hanyang Securities expects Fine M-Tec to secure more than half of that market. Since LYI Tech’s initial supply capacity is understood to be insufficient to fully meet demand, additional volume allocations may also be possible. If its supply share exceeds expectations, Apple-bound revenue alone could contribute more than 200 billion won in the second half.
The Apple effect will not be limited to revenue growth. Previously, new Samsung foldable products determined the upper end of earnings, but the addition of Apple volumes could raise the lower end of off-season earnings as well.
Meanwhile, Hanyang Securities forecast that Fine M-Tec’s consolidated revenue this year will rise 64.0% year on year to 392.17 billion won, while operating profit will surge 1,238.5% to 25.9 billion won. It expects the third quarter, when Samsung and Apple volumes are reflected simultaneously, to deliver record-high earnings. The fourth quarter, traditionally an off-season period, is also highly likely to shift into a near-peak season because of the Apple effect, it said.
Lee assessed, "Samsung raises the peak of earnings, while Apple lifts the floor," adding, "Fine M-Tec is now proving the scale of its growth with figures, not expectations."


[email protected] Kim Kyung-a Reporter